House Republicans Propose $2.5 Trillion In Spending Cuts Over Ten Years

A group of conservative House Republicans laid out a plan to drastically cut federal spending over the next ten years, targeting everything from Amtrak to Fannie Mae and Freddie Mac to subsidies for mohair producers.

All told, it adds up to $2.5 trillion in cuts, whacking 55 different agencies and programs, including public housing, benefits for federal employees, funding for the arts and humanities and international aid.

Many of the proposed cuts represent longtime conservative targets, like the National Endowment for the Arts and the Corporation for Public Broadcasting. They also would gut a wide range of energy and environmental programs — like weatherization and beach erosion funds — and have proposed clamping down on federal employee unions.

But the long list of spending cuts is notably silent on the two biggest federal budget drivers — entitlements and defense spending.

The proposed cuts were laid out Thursday by the Republican Study Committee, a caucus of House conservatives, and while it has not won the endorsement of GOP leaders, this package represents the most specific list of cuts so far from the new Republican majority.

The heart of the measure is a substitution of fiscal 2008 spending levels for nonsecurity and nonveterans programs when the current continuing resolution expires on March 4, followed by a subsequent reduction of domestic spending to 2006 levels.

The plan also cuts funds for the District of Columbia, including subsidies for the Washington Metropolitan Area Transit Authority.

House Republican Study Committee Chairman Jim Jordan (R-Ohio) stepped out Thursday to define his conservative credentials with a rhetorical flourish and a litany of spending cuts.

“I have never seen the American people more ready for the tough-love solutions,” Jordan told a few dozen people at The Heritage Foundation in a speech that was truncated by House votes. “The question today is whether the political class will rise to the level the American people set” in their political activism and the election results in the past 18 months.

“It doesn’t fix everything, but it’s a good first step,” Jordan said. “Everything needs to be on the table.” He included entitlements such as Social Security and Medicare, plus defense spending — even though his $2.5 trillion plan did not venture into those areas. He also said he is working on a welfare reform plan that would — “as soon as unemployment gets down to an acceptable level” — freeze social spending at 2007 levels.

The fact that the plan doesn’t even touch to two biggest items on the budget is troublesome, and it’s worth noting that $2.5 trillion over ten years amounts to no more than 6.5% of the total amount of anticipated Federal spending over that period. Nothing to sneeze at, but hardly the solution to our problems. Nonethless, it’s a good start. Let’s see them put this in legislative action, get it passed, and dare the Senate not to be fiscally responsible.

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About Doug MataconisDoug holds a B.A. in Political Science from Rutgers University and J.D. from George Mason University School of Law. He joined the staff of OTB in May, 2010 and also writes at Below The Beltway.
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Comments

Some of these cuts strike me as things that will cost more money in the long run. Cutting rail, for example, means more spending on roads, which require more maintenance. Cutting money for beach erosion control means more FEMA money spent in the aftermath of storms, cutting money on weatherization means more money spent on energy costs, etc.

I have no problem with spending cuts per se, but spending more money in the long-term to save money in the short-term strikes me as unwise.

Talk about job-killing. This plan is guaranteed to increase the unemployment rate, and not just with all of the civil employees getting fired from it.

Add to that the fact that $2.3 trillion of the $2.5 trillion in cuts (or 92%) are not specific cuts at all, but come from instituting a 2006-level cap on appropriations (punt!). So basically the Republicans have identified about $200 billion in cuts over ten years, and the rest is fantasyland.

Most of the rest of the stuff is just there to screw over the regular Republican enemies: the NEA, CPB, poor people who need legal assistance, energy efficiency, public transportation, etc.

There are a few decent cuts in there: $1 million in mohair subsidies, the $14 million USDA sugar program, etc. However, while I disagree with them, those programs are mostly designed to allow American businesses to compete with overseas competitors who otherwise would be able to dramatically undercut their prices. In other words, more job killing.

The cuts aimed at the poor have an extra benefit for the GOP – not only do they harm a group of people who are disproportionately minority and Democratic, but also will exacerbate budget problems for state and local governments that will have to deal with the mess, increasing the chances of undermining unions that have contracts with those governments. The GOP war on cities, the poor and union workers continues.

I’m all for the cuts, but talk about Fannie and Freddy at this point is kind of crazy. They’ve been made the toxic waste dump for worst mortgage backed securities. Drop federal support for that trick and the banking system takes the hit.

Once they’ve been set up as the secret subsidy for BofA, Goldman, etc. … how exactly do you pull that away?

BTW, Planet Money had a really good episode recently on Freddy/Fannie and the 30 year fixed mortgage. listen here

Basically, without them, don’t expect that kind of loan.

And if you can do without, sure, stop Freddy and Fannie initiations going forward. I don’t think stooping new loan initiations will do much for the deficit though. It’s all about the toxic waste on the books.

Maybe I’m wrong but I assume these are place-holder suggestions, not intended to be taken literally. Or to put it another way, this own’t be taken literally. It’s a gambit whether or not it’s explicitly intended as such.

What I would hope would happen is Democrats come back with a list of their own rather than just looking for reasons that this list isn’t right. We can’t just say well, all your cuts suck, so everything stays the way it is. Let’s hear some serious proposals from the left.

None of this happens in the next year anyway, so one hopes the jobs situation is at least somewhat stronger by then and it’ll be time to get serious about the deficit.

What I would hope would happen is Democrats come back with a list of their own rather than just looking for reasons that this list isn’t right.

Enact large scale defense cuts (eliminating, among other things, all the countless, ridiculously expensive and outdated projects that require different parts to be made in dozens of different states), end our two current wars, and institute single payer, Medicare-style healthcare for all. Institute means testing for Social Security, raise the retirement age to 70, and institute minor payroll tax increases. I would add in a bunch of small cuts along the lines of what the Republicans have proposed, but those would add up to a tiny fraction of the above.

There’s my Democratic plan to deal with our budget deficits. I know it will eliminate some jobs, but would do so while actually addressing our biggest budget issues.

Alex, according to your logic how can we cut anything? Cuts will cost money? I usually hear that from public sector bureaucrats protecting their own budgets. You know, the ol’ if we don’t spend money it will cost money.

Michael, Acerbic as usual but fair. For a political opponent your okay sometimes.

Mantis, It kills public sector jobs while saving the country and allowing the private sector to create jobs. Fair trade and smart trade.

Mithras, Still believing conservatives hate kids and old people? The other choice we have is to bankrupt the country and really hurt them.

John, Fannie and Freddie will adapt and still be valuable. The influence of Barney Frank needs to be purged out of it.

Michael, Let’s hope the Dems come back and raise the stakes. A little budget poker with each raising the other?

Mantis. I agree, throw some defense cuts in. Real cuts.

Stormy, The public sector has long considered failure to increase budgets as cuts. Go to a school board meeting and you’ll see what I mean. Even if we just stop government growth we have something of a victory.

So we should give Republicans an A+ just for finally releasing some specifics, even if 92% of what they propose “cutting” is not at all specific? Sorry, but merely proposing policy doesn’t make it good; it’s just the bare minimum effort required to legislate.

Mantis, It kills public sector jobs while saving the country and allowing the private sector to create jobs.

Speaking of cuts, and one that the left and libertarians should be able to agree on, why not get rid of most or all of those overseas military bases? We don’t really need to maintain permanent bases in Germany anymore. The Warsaw pact is several decades gone now. Nor do we need bases in Japan. Their presence isn’t really going to help in case of some hypothetical war with North Korea or China. There are some 200 bases the military maintains outside of the US of which only a handful can legitimately claimed to be vital to our security (and those claims are suspect anyway).

Close the bases and sell the land back to the native country. Start with Guantanamo Bay.

Alex, according to your logic how can we cut anything? Cuts will cost money? I usually hear that from public sector bureaucrats protecting their own budgets. You know, the ol’ if we don’t spend money it will cost money.

Feel free to refute the specifics.

But this list reminds me of the idiotic cuts that companies make right before they go bankrupt because all the accountants care about is the next quarter, not the long term.